Finance Bill

Tulip Siddiq Excerpts

Committee of the whole House
Wednesday 11th December 2024 Commons Chamber

[The Chairman]

With this it will be convenient to consider:

Clauses 51 to 53 stand part.

New clause 6—Sections 50 and 51: impact on private rental sector—

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, publish an assessment of the impact of the changes introduced by sections 50 and 51 of this Act on the private rental sector in England and Northern Ireland.

(2) The assessment in subsection (1) must consider—

(a) the effects of the provisions of sections 50 and 51 of this Act on the cost of private rent in each region within England and in Northern Ireland,

(b) the effects of the provisions of sections 50 and 51 of this Act on the supply of private rental properties in each region within England and Northern Ireland,

(c) any other implications of the changes introduced by sections 50 and 51 of this Act.”

This new clause requires the Chancellor to review the impact increased rates of stamp duty for additional dwellings are having on the private rental sector in England and Northern Ireland.

New clause 7—Review of effects of sections 50 and 51 on housing market—

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, publish an assessment of the impact of the changes introduced by sections 50 and 51 of this Act, on the housing market in England and Northern Ireland.

(2) The assessment in subsection (1) must consider—

(a) the effects of the provisions of sections 50 and 51 of this Act on the demand for houses in each region within England and Northern Ireland, and

(b) the implications for the housing market of the provisions of sections 50 and 51 of this Act.”

This new clause requires the Chancellor to review the impact increased rates of stamp duty for additional dwellings are having on the housing market in England and Northern Ireland.

[The Economic Secretary to the Treasury (Tulip Siddiq)]

This is a Budget to fix the foundations of the economy and deliver change by protecting working people, fixing the NHS and rebuilding Britain. The Government are achieving this by taking difficult decisions on tax, spending and welfare to repair the public finances and increase investment in public services and the economy, to rebuild Britain and unlock long-term growth. This Finance Bill delivers on a number of the Government’s priorities for tax reform, prioritising stability for businesses making investment decisions and ensuring fairness and sustainability in the long term. We will discuss the full range of manifesto commitments delivered in this Bill throughout its passage, but today, I will talk about an area in which the Government have decided to go further than our manifesto commitment.

The clauses we are debating increase the higher rates of stamp duty land tax on purchases of additional dwellings by individuals and of dwellings by companies from three percentage points above the main residential rates of SDLT to five percentage points. These clauses also increase the single rate of SDLT payable by companies and other non-natural persons when purchasing dwellings worth more than £500,000 from 15% to 17%. They will support home ownership by ensuring that those looking to move house or purchase their first property have a greater advantage over second home buyers, landlords and companies purchasing dwellings. These changes will raise £310 million per year by 2029-30, which will be used to support the Government’s first steps and other priorities.

One of our manifesto commitments was to increase the non-resident SDLT surcharge by one percentage point. The Government have decided to go further than that commitment and increase the higher rates of SDLT, known as higher rates for additional dwellings. This will raise more money than the manifesto policy, helping to restore economic stability and address the £22 billion-worth of unfunded pressures, as well as supporting delivery of the Government’s first steps. Increasing the higher rates for additional dwellings will also go further to rebalance the housing market in favour of first-time buyers and those moving house.

[Dr Luke Evans]

The Minister mentions first-time buyers. However, the change to stamp duty is likely to affect them, because they are now being brought into paying stamp duty. How does that help first-time buyers to realise their aspiration of getting into the housing market?

[Tulip Siddiq]

I can tell the hon. Gentleman very confidently that the thing that will help first-time buyers in this country most is building more houses. His Government absolutely failed to do that, but we will be doing it.

Returning to the Bill, we estimate that approximately half of those paying the non-resident surcharge will also pay the higher rates for additional dwellings. This means that a non-resident purchasing an additional residential property worth £300,000 now pays £23,500 as a result of the change in rates, compared with £17,500 before the change, an increase of £6,000. This compares with a UK-resident purchaser buying their first home, who pays no SDLT, and a UK-resident home mover, who currently pays £2,500. This change therefore improves the comparative advantage of UK-resident home movers and first-time buyers—as the hon. Member for Hinckley and Bosworth (Dr Evans) might be pleased to know—while ensuring that no additional barriers are faced by those coming to the UK and buying their first or only home.

Those buying an additional property before they can sell their main residence will be liable for the higher rates for additional dwellings. However, this will be refunded if the previous main residence is sold within three years of the purchase of a new main residence, or longer if there are exceptional circumstances, such as delays in cladding remuneration. This ensures that only those who are genuinely liable for higher rates will be required to pay them.

Clause 50 increases the higher rates of SDLT on the purchase of additional dwellings by individuals and dwellings by companies from three percentage points above the main residential rates of SDLT to five percentage points. This applies to transactions with an effective date on or after 30 October this year and before 1 April next year.

[Noah Law (St Austell and Newquay) (Lab)]

Does the Minister agree that this Government’s decision to raise stamp duty in such a manner is vital for tackling the plague of second homes that we have seen in communities such as Cornwall?

[Tulip Siddiq]

This is something I have seen in my own constituency, so I know what my hon. Friend is referencing. It is our intention to tackle that, but we have had to make these decisions because of our economic inheritance when we got into government, which the Conservative party obviously hid during the election. We have had to make some difficult decisions, and this is how we plan to fix the foundations of our economy.

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[Kit Malthouse (North West Hampshire) (Con)]

I am grateful to the Minister for giving way, but I am surprised she has not declared her interest because I believe she is herself a landlord. She presumably owns another property, so to cast aspersions on people who do as some kind of plague is, I think, a little unfair.

I assume from this measure that the Minister would expect there to be some impact on the rental market. This is designed to deter people from becoming landlords. Given that 90-odd per cent of our rental properties in the UK are owned by people who have two or fewer properties, what is the scale of the impact she is expecting? How many people are likely to either exit being a landlord or, particularly in somewhere like London, not bother being a landlord at all? What will be the wider impact given that in the capital, such as where she represents, lots of people have no option but to rent, because they are unable to accumulate the deposit required to buy a property at an inflated value? Are we going to see fewer rental properties in the capital?

[Tulip Siddiq]

I thank the right hon. Gentleman for his intervention. I am a landlord, and that is absolutely declared in my entry in the Register of Members’ Financial Interests. If I was meant to declare it for the purposes of this debate, I do apologise, but it is referenced very clearly in my entry. I would say that, as a landlord, I am very happy to pay extra tax if it is necessary to fix the foundations of our economy.

I do not agree with the right hon. Gentleman’s assessment of London. I think we are more resilient than that, especially in Camden, and I think we will be fine.

Clauses 50 and 51 will provide an advantage for first-time buyers and those moving home, and it will help to support home ownership. The OBR-certified costing estimates that increasing the higher rates for additional dwellings by 2 percentage points is expected to result in 130,000 additional transactions over the next five years by first-time buyers and others buying a primary residence. I hope that addresses some of the concerns of Conservative Members.

Clause 52 introduces special transitional rules to ensure no additional tax is payable for land transactions substantially performed before 1 April 2025. In most cases, SDLT is charged at the point of completion in the property-buying process. In some cases, however, such as where the buyer has performed their purchase by paying for the property or taking possession of it, the tax is chargeable at that earlier point. The clause in question ensures that buyers who have performed their transactions will not pay more tax as a result of the changes in rates brought about by clauses 50 and 51 when they complete their purchase.

Clause 53 increases from 15% to 17% the single rate of SDLT payable by companies and other non-natural persons when purchasing dwellings worth more than £500,000. The single rate of SDLT was introduced alongside the annual tax on enveloped dwellings to deter the practice of buying and owning UK residential properties within a corporate wrapper by increasing the rate companies pay. The single rate applies where companies and other non-natural persons buy a dwelling for more than £500,000 that they do not intend to use for a relievable purpose such as renting the property or developing it. Increasing the single rate keeps it aligned with the highest rate of tax paid on purchases of the most expensive residential properties, so that the tax remains effective as a deterrent to enveloping.

In summary, increasing the higher rates of SDLT will ensure that those looking to move house or purchase their first property have a greater advantage over second home buyers, landlords, and companies purchasing dwellings. The measure will raise more money than the manifesto policy, and go further to rebalance the housing market. The changes will raise £310 million per year by 2029-30, which will be used to support the Government’s first steps and other priorities.

[Dr Luke Evans]

rose—

[Tulip Siddiq]

I have already given way once to the hon. Gentleman.

[James Wild]

We turn to the important issue of taxes on residential property, and another set of tax rises from this tax-raising Labour Government. I will speak to clauses 50 to 53, and new clauses 6 and 7. Over 14 years in government we delivered 2.5 million additional homes. Our manifesto pledge to build 1 million homes in the course of the last Parliament was met, and we delivered on our commitment to build the homes that people need for a more secure future. The Bill introduces measures that dampen the housing market, increase pressure on housing supply, and reduce labour mobility. The Government talk about helping renters, but experts warn that these measures could increase rents, and they do nothing for those who cannot afford to buy their own home.

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[The Second Deputy Chairman of Ways and Means (Caroline Nokes)]

I call the Minister.

[Tulip Siddiq]

I thank all hon. Members for contributing to the debate today, and especially my hon. Friend the Member for North Warwickshire and Bedworth (Rachel Taylor)—it is refreshing to hear someone with genuine knowledge of the housing market speak in the Chamber. I point out gently that the Office for National Statistics’ private rents index shows that renting in England is now 50% more expensive than 14 years ago, and that rents in London reached a record high this February, when we were not in government.

[Rachel Taylor]

I am slightly perplexed as to why the Opposition continue to disagree with this policy, which is almost a replica of one they introduced a few years ago, for exactly the same reason. Why do they continue to oppose it? They fail to understand that landlords did not stop buying properties to rent out and rich people did not stop buying holiday homes just because they had to pay a little more in a one-off tax.

[Tulip Siddiq]

I have to admit that I have found this debate a little baffling, given some of the arguments made from the Opposition Front Benches. However, I will respond to some of them now.

[Kit Malthouse]

Our concern is that there has been no assessment of the impact on the rental market. All that the Opposition new clauses are asking for is a review, because no evidence has been adduced in this debate. There are three people who have spoken in this debate who have second properties—who are landlords—and that is completely fine. What we are saying is that there will be an impact on future landlords and on future behaviour from this tax, as there was from the tax that was introduced by the previous Government.

The second thing to say—forgive me for the slightly extended intervention, Madam Chair—is that when the Government are setting levels of tax, there is an optimal point at which to levy tax in order to collect the maximum revenue, beyond which it starts to become penal and has a deterrent effect on activity. I suppose what we are saying is that we have got this far, and wish to go no further.

--- Later in debate ---

[Tulip Siddiq]

I thank the right hon. Gentleman for his speech. I will be referencing everything; he should probably listen carefully, because I will be responding to all the points he has made about private rental markets and the impact this policy will have.

I will turn to some of the new clauses tabled by the Opposition—I do not think the right hon. Member for Central Devon (Mel Stride) is present. New clauses 6 and 7 would require the Government to report on the impact of the changes introduced by clauses 50 and 51 on the cost and supply of private rental properties and on the housing market, respectively, in England and Northern Ireland. Although it is important to understand the impact that the measures could have on rental costs, supply and the housing market—and, in turn, tenants, who have been mentioned—the Government consider the new clauses to be unnecessary because the information is publicly available. The Ministry of Housing, Communities and Local Government publishes regular updates, as the House will know, on the level of housing supply in England, as well as the English private landlord survey, which provides data on supply in the private rented sector. In addition, HM Land Registry publishes extensive data on house prices in England, including regional and local authority area breakdowns. HMRC also publishes statistics and data on property transactions and stamp duty land tax receipts.

On housing supply, the Budget set out a series of new investments to kick-start the biggest increase to social and affordable housebuilding in a generation. This is an important step to providing the conditions needed for the market to deliver 1.5 million homes—homes that are desperately needed by our constituents. The Government recognise that the rented sector is often a key part of someone’s home ownership journey. The Renters’ Rights Bill will improve the current system for both the 11 million private renters and 2.3 million landlords in England. It will give renters much greater security and stability, so they can stay in their own homes for longer, build lives in their communities and avoid the risk of homelessness.

The measures in the Bill to increase the highest rate for additional dwelling are intended to support home ownership among first-time buyers and those moving home, giving them an advantage in the housing market. The OBR certified costing assumes that increasing the higher rates of SDLT by two percentage points is expected to result in 130,000 additional transactions over the next five years by first-time buyers and other people buying a primary residence.

In summary, the Government have already considered the impact of clauses 51 and 52 on the private rented sector and housing market. We will continue to publish housing market statistics in the usual way, keep all tax policy under review and evaluate the impacts of all changes. Therefore, the proposed reports are unnecessary and I urge the House to reject the new clauses. I hope I have been able to reassure the hon. Members who tabled the new clauses that the additions and changes are just not necessary, for the reasons I have set out, and I urge the House to reject new clauses 6 and 7.

Question put and agreed to.

Clause 50 accordingly ordered to stand part of the Bill.

Clauses 51 to 53 ordered to stand part of the Bill.

New Clause 6

Sections 50 and 51: impact on private rental sector

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, publish an assessment of the impact of the changes introduced by sections 50 and 51 of this Act on the private rental sector in England and Northern Ireland.

(2) The assessment in subsection (1) must consider—

(a) the effects of the provisions of sections 50 and 51 of this Act on the cost of private rent in each region within England and in Northern Ireland,

(b) the effects of the provisions of sections 50 and 51 of this Act on the supply of private rental properties in each region within England and Northern Ireland,

(c) any other implications of the changes introduced by sections 50 and 51 of this Act.”—(James Wild.)

This new clause requires the Chancellor to review the impact increased rates of stamp duty for additional dwellings are having on the private rental sector in England and Northern Ireland.

Brought up, and read the First time.

Question put, That the clause be read a Second time.